Former Goldman Sachs banker’s bet on housing

Robert Mullen, the former head of Goldman Sachs’ credit and mortgages division, has raised nearly $1 billion to buy distressed single-family houses across the U.S. to rent, Bloomberg News reported. After presiding over the bank’s lucrative bet against subprime mortgage-backed securities five years ago, Mullen, 54, is taking a contrary position.

He plans to join other financial giants in taking advantage of a 29 percent dip in home prices since the 2006 peak and greater demand for rentals for Americans who can’t afford to buy homes, Bloomberg said.

His private equity fund, Fundamental REO, has already purchased or is close to possessing 2,500 homes through auctions, government agencies and even an affordable housing non-profit in Arizona, according to Bloomberg.

Mullen and Curt Schade, a former colleague at Bear Stearns, the Wall Street bank that went belly up in September 2008, are buying homes in Arizona, California, Florida, Georgia and Nevada for between $70,000 and $190,000, planning to rent them for $900 and $1,950 a month, the news agency said.

Former bankers and fund managers are making big bets on some of the cities hardest hit by the housing collapse and recession, including Miami, where 30 percent of foreclosed homes were bought by institutional investors last year. [Bloomberg News] –Emily Schmall